Events, trends, issues, ideas and journalism about health care and health in Kentucky

Wednesday, April 4, 2018

50-cent cigarette-tax hike largest ever in Ky. but will do little to cut smoking, advocates say; new tax on e-cigs a late scratch

By Melissa Patrick
Kentucky Health News

FRANKFORT, Ky. -- As part of a larger tax bill, the Kentucky General Assembly voted April 2 to increase the state's cigarette tax by 50 cents, to $1.10 per pack. That fell short of the $1 increase wanted by health advocates, who bemoaned "a missed opportunity" to improve the health of Kentuckians. And in the final hours, legislative leaders dropped a plan to tax electronic cigarettes.

Still, the advocates said the tax increase is historic.

"It's the biggest increase in Kentucky history, and there is something to be said for that," said Ben Chandler, president and CEO of the Foundation for a Healthy Kentucky. "Having said that, I think it's apparent to anybody who knows anything about this that it's not going to get the health benefits that we had been seeking . . . and that's a missed opportunity."

And that's "a huge understatement," said Amy Barkley, a regional advocacy director for the Campaign for Tobacco-Free Kids. "They voted for a tax increase that is just a tax increase," she told Kentucky Health News after a news conference with Chandler.

Barkley's group is part of the Coalition for a Smoke-Free Tomorrow, a group of more than 150 organizations chaired by Chandler. It argued that unless the price of a pack of cigarettes goes up by at least $1, tobacco companies can keep smokers hooked by giving discounts to retailers and coupons to consumers, and then gradually raise the price to make up the difference.

Chandler said the "price shock" of a $1 increase would have led to more than "50,000 people here in Kentucky either quitting or not starting."

At 26 percent, Kentucky has the second highest smoking rate in the country. It also has the nation's highest cancer rate, and cancer death rate. Chandler has often said that this is not a coincidence, since 34 percent of Kentucky's cancer deaths are related to smoking.

"We are the cancer capital of this country and we've got to do something about it. . . . and I think every method available ought to be on the table to try to do that," he said.

Despite the coalition's lobbying and a recent poll that found nearly 70 percent of registered voters would support a $1 cigarette-tax increase, a 50 cent hike was the best the lawmakers could do. After the House passed it, the Senate rejected it, but after the House passed a surprise pension-reform bill, the Senate accepted the tax as part of a package of tax cuts and increases.

"We failed to make our case, or Philip Morris made theirs better," Barkley said. The Altria Group subsidiary's chief state-government lobbyist met with top legislative leaders in an effort to make sure the tax didn't include smokeless tobacco (made in an Altria plant in Hopkinsville) or electronic cigarettes, in which the company has invested.

"It''s really discouraging, to say the least, that legislators continually yield to the tobacco industry, which we know no longer fights for no tobacco increase," Barkley said. "They fight for a low tobacco increase that they can manage by doing the discounting and so forth."

One version of the tax bill included a 15 percent tax on electronic cigarettes, which are now more popular among teenagers than cigarettes, but was removed before the final vote. -- apparently not long before, because the list of effective dates for various provisions mentioned both cigarettes and e-cigarettes. One clause in the bill excludes e-cigs from the definition of cigarettes.

John Cox, spokesman for Senate Republican leaders, declined to say why the late changes were made, and Philip Morris declined to comment. Rudy didn't return an e-mail seeking comment.

The tax measure, House Bill 366, narrowly passed the Senate 20-18 and out of the House 51-44, with no Democrats voting for it. Its main sponsor, House Appropriations and Revenue Committee Chair Steven Rudy, R-Paducah, said during his April 2 floor pitch that the 50-cent tax hike on cigarettes would improve Kentuckians' health.

The increase is estimated to generate about $132 million in 2019, and decline to $112 million in 2020, apparently on the fact that smokers are dying off and a belief that the tax hike will make some of them quit.

Asked if a 50 cent hike was better than nothing, Chandler said the foundation's view is that "It is better than zero," but also said there are differences of opinion inside the coalition.

For example, Barkley said in an email, "Nothing would have been better from a health standpoint because we have lost our chance. They aren't going to raise it by $1 or more so soon after the 50 cents."

Chandler said the coalition and the foundation would keep working for a higher tax. "We don't believe that it's over because that's not been the history of the cigarette tax in Kentucky," he said, noting that this is the third time the cigarette tax has been raised since the last 20 years. "I don't think it's accurate to say that once you've had an increase somehow it's over."

Chandler said the foundation supports the increase because it raises revenue, which is often spent on things that improve "social determinants of health," like providing school transportation. "It's a good thing for health to have added revenue," he said.

He said the foundation will also continue to work on tobacco-cessation efforts and "ramping up our efforts" on local smoke-free policies.

This is the first year the foundation has actively lobbied. Tom Loftus of the Louisville Courier Journalreported the foundation was the second-largest spender on lobbying for the first two months of the session, at $107,336, and that Altria spent "far more" than any other lobby, spending $156,000.

Asked why the foundation had made a shift to lobbying, Chandler said, "We believe that you can make a bigger impact on health through getting the government to act in certain ways, and adopt certain policies to get their people to be healthy, than you can by simply making grants and through solely philanthropic efforts. . . . We believe that we can have an outsize impact, we can punch above our weight if we are active in public policy matters."

The Foundation for a Healthy Kentucky funds Kentucky Health News but plays no other role in it.

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Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Media at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.Republication of any KHN material with proper credit is hereby authorized, but if the republication is longer than a news brief we ask that it contain the first sentence of this paragraph. For our site that features articles of lasting importance, go here.